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Canada allows railway behind disaster to operate

The Associated Press

Updated:
08/17/2013 01:46:09 PM EDT

OTTAWA—A Canadian government agency has determined that the U.S. rail company whose runaway train crashed into a small Quebec town, killing 47 people last month, has adequate insurance to keep operating for the next month and a half.

The Canadian Transportation Agency said the Montreal, Maine & Atlantic Railway provided evidence it had adequate third-party liability insurance coverage to operate from Aug. 20 to Oct. 1, 2013. The agency's decision late Friday reversed an Aug. 13 order that would have halted the railroad's operations from early next week.

The agency said the rail company provided new facts and information demonstrating it had adequate third-party liability insurance for the short term. However, agency spokeswoman Jacqueline Bannister said Montreal, Maine & Atlantic must show it has the funds to pay the self-insured portion of its operations, or the regulator will suspend its operations from Aug. 23.

On July 6, an unmanned train, with 72 tankers of crude oil, came loose, derailed and crashed into the center of the town of Lac-Megantic near the Maine border in eastern Quebec. Several tankers exploded, destroying 40 buildings. An estimated 1.48 million gallons (5.6 million liters) of oil were spilled.

The rail company was granted creditor protection on Aug. 8 after the company said it couldn't afford the cleanup and reconstruction costs for the town.

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In its bankruptcy filings, the railway's Canadian subsidiary said it only had $25 million in insurance coverage, while estimating the environmental cleanup alone will exceed $200 million. The railway and its Canadian counterpart, Montreal, Maine & Atlantic Canada Co., also cited debts to more than 200 creditors following the disaster.

A company attorney has said he expects executives to explore putting the rail company up for sale within weeks.

Montreal, Maine & Atlantic also faces a series of class-action lawsuits on behalf of the victims.